Topley’s Top Ten – March 10, 2020

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Matt Topley
March 10, 2020

1.It’s Not 2008…U.S. Financial Stress at 2011 Levels.

A lot of my incoming clientconversations today are about the key question: “How bad is it?”. In otherwords, what is the net impact on the economy and corporate earnings of lowerrates and a lower dollar versus lower equities and wider credit spreads? Tick-by-tickmeasures of financial conditions show that financial conditions are currentlyas tight as they were during the euro crisis in 2011. In other words, anyrecession and slowdown in earnings associated with the ongoing moves in marketswill not be as bad as during the financial crisis in 2008/2009, see chart belowand here.

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Let us know if you would liketo add a colleague to this distribution list.

Torsten Sløk, Ph.D.Chief EconomistManaging DirectorDeutsche Bank Securities

2.PSCE-Small Cap Energy ETF $2.50 Last

PSCE ETF

3.1999 Internet Bubble Like Intra-Day Moves in Oil Stocks

4.Bond Collapses in Energy Just as Bad.

Wolf Street

5.Pimco 25+ Zero Coupon Bond

Michael Batnick

6.Yellow Line Needs to Stabilize.

Liz Ann Sonders-Schwab

7.Grid on Downturns.

4 ways to stay calm when markets stumble-CapitalGroup

8.Down Jan and Feb History

LPL BLOG

The S&P 500 Index fell inJanuary and February. This rare combo isn’t something the bulls wanted to see,as future returns can be quite depressing. “History tells us that bad thingscan happen after the first two months of the year are both red,” explained LPLFinancial Senior Market Strategist Ryan Detrick. “This is only one warningsign, but it isn’t one to blindly ignore either.”

Asshown in the LPL Chart of the Day, a bounce in March is quite possible forstocks after being down the first two months of the year; that’s the good news.The bad news? The final 10 months have been up only 2.3% on average, while thefull year has been lower 4.9% on average. Compare that to when the first twomonths have been positive, the final 10 months have been up 12.2% on averageand the full year has been up 19.8% on average.

9.Fear and Greed Index Hits 3.

10. 3 Types of Exaggerated Thinking That Create Unnecessary Drama

Posted on December 23, 2013 by StevenHandelWe all exaggerate sometimes. And it’s not always a bad thing, especially ifit’s just spicing up a story to a friend or making fun of a little thing thathappened to us on the way to work.

However,I often find that people who are the most stressed in life also have a strongtendency to exaggerate every little bad thing that happens to them. They can’thandle something without treating it like it’s the end of the world.

Ofcourse, everyone experiences daily stress and frustrations, but when weexaggerate these bad experiences we often add unnecessary stress and drama tothem that doesn’t have to be there.

Evenif we think we are just being playful with our exaggerations, it’s stillimportant to be mindful of them. You may think to yourself, “I’m just joking,”but if you say these things repeatedly then your mind begins to believe it atan unconscious level.

Intoday’s world, “exaggeration” seems to be an all-too-common response to ourdaily lives. People seem to enjoy turning ant hills into mountains, maybe evenbecause they are addicted to their own problems and drama.

Hereare 3 main ways your exaggerations can create unnecessary stress. Try to bemore careful about these types of exaggerations in your own thoughts andspeech.

Overgeneralizing

Overgeneralizingis when we overestimate the frequency that something happens to us.

For example, many timessomething bad will happen to someone – maybe they spill something on theirshirt, or get rejected from a potential date, or lose their favorite pair ofshoes – and they will think, “This always happens to me!”

Often, this is a type ofexaggeration. Some people seem to only remember the times that something badhappened to them, but forget all the times something bad didn’t happento them.

It’simportant to avoid this kind of distorted thinking. When you find yourselfthinking like this, try to take a step back and actively look for past eventsor situations that prove you wrong.

Isit really true that this “always” happens to you? Can you think of any timethat things didn’t turn out that way? All it takes is one example to prove yourexaggeration is misguided or incorrect.

Catastrophizing

Catastrophizingis when we overestimate the importance of something that happens to us.

Inthe heat of the moment, it can be really easy to feel like this one bad thingis going to change the course of our lives forever – or that it really is “theend of the world.” But often this isn’t the case.

Whatseems like a really big deal at the time is often a lot less significant whenwe look back on it days, weeks, or months later.

Signsof catastrophizing in your daily life include saying things like, “This is theworst day ever” or “I’ll never be happy again” or “I’m a complete loser whofails at everything.”

Theseare often exaggerations that don’t reflect the truth. And when you make thingsout to be worse than they really are, it makes the experience that much morestressful and painful.

Forexample, if you’re telling someone about something bad that happened to youearlier, and you exaggerate it to make it seem much worse, you are not only“re-living” the stressful experience, but also intensifying your memory of it.

Nextthing you know, you tell the same story to 2-3 more people and a tiny stressthat you could’ve just let go of in the moment has now transformed intosomething much bigger and stronger than it needs to be.

Don’tget me wrong, bad things happen to people – but we need to learn to let go ofthe small stuff and not have to create a tragedy out of every story. These typeof exaggerations can become unhealthy.Jumping to conclusions

Jumpingto conclusions is what happens when we overestimate our knowledge about asituation and make a snap judgment.

Whenwe jump to conclusions, we often think we know a lot more about an event thanwe really do. This illusion of knowledge can end up giving us a wrong ormisguided impression of a situation, because we usually don’t know all therelevant facts.

Forexample, our spouse comes home late one night, so we assume they must becheating on us, without getting the full story.

Ofcourse this type of over-reactive thinking can lead to a lot of unnecessarydrama and stress. It often leads to us not only misreading a situation, butthen acting in a way that only makes it worse.

Becareful when you find yourself making exaggerations like, “I’m 100% certain” or“I know as a matter of fact” or “There’s no way that happened” when the truthis you usually don’t know for sure what’s true.

Oftenit is better to suspend your judgement until you have enough facts and reasonsto support it beyond a reasonable doubt. Snap judgements can be wrong anddangerous.

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